Excerpt:.....of the land and loss of part of business. (ii) loss of earnings - section 23(1) (fourthly) of land acquisition act - compensation - net income is multiplied for the purpose of finding out the capitalised value - multiple to be applied is 20. (iii) solatium - section 23(2) and(1) (first) and (fourthly) of land acquisition act - solatium payable on market value under clause first. (iv) rate of interest - section 28 of land acquisition act - claimant withdraw the amount before the amended act - held, raising of rates of interest not application. - - 2500/- by 21 years, which was the remaining period for which the claimant could enjoy the lease of the land, the land acquisition officer found that the total compensation to which the claimant could be held entitled to was rs. it is not,..........against the judgment of the presiding officer, nagar mahapalika tribunal, agra, delivered in land acquisition case no. 98 of 1961. first appeal no. 228 of 1974 has been filed by the nagar mahapalika, agra, whereas the connected first appeal no. 391 of 1974 is that of lajpat rai kapoor (hereinafter referred to as the claimant).2. the brief facts are these. a notification under section 36 of the town improvement act iii of 1919 was published in the u. p. gazette on 2/-6-1953. this publication of the notification is equivalent to sub-section (1) of section 4 of the land acquisition act. this was followed by another notification dt. 13-8-1955 under section 42(1) of u. p. town improvement act. this notification is equivalent to section 6 of the land acquisition act. the state government.....

Judgment:

K.C. Agarwal, J.

1. These two appeals have been preferred against the judgment of the Presiding Officer, Nagar Mahapalika Tribunal, Agra, delivered in Land Acquisition Case No. 98 of 1961. First Appeal No. 228 of 1974 has been filed by the Nagar Mahapalika, Agra, whereas the connected First Appeal No. 391 of 1974 is that of Lajpat Rai Kapoor (hereinafter referred to as the claimant).

2. The brief facts are these. A notification under Section 36 of the Town Improvement Act III of 1919 was published in the U. P. Gazette on 2/-6-1953. This publication of the notification is equivalent to Sub-section (1) of Section 4 of the Land Acquisition Act. This was followed by another notification dt. 13-8-1955 under Section 42(1) of U. P. Town Improvement Act. This notification is equivalent to Section 6 of the Land Acquisition Act. The State Government sanctioned the acquisition as required by U. P. Town Improvement Act and the Scheme.

3. Upon the proceedings up to the stage of Section 42(1) being over, notices under Section 9 of the Land Acquisition Act were issued by the Special Land Acquisition Officer. In pursuance, a large number of claims were preferred. One of them was by the claimant, who was the owner of M/s. Gulab Ice & Cold Storage. Upon the notifications referred to above, 637 square yards of land of the aforesaid claimant was notified for acquisition. His plots were 44, 45 and 48 of Chak 1, Sawad Sahar in district Agra. These plots were obtained by the claimant on a long term lease taken by him for the purpose of constructing cold storage and ice factory. He actually constructed a factory known as Gulab Ice and Cold Storage before acquisition. Adjacent to the cold storage, the claimant had 1350 square yards of land. Out of this 1350 square yards, 637 square yards of land had been acquired. The claimant alleged that the entire land, measuring 1350 square yards, was being used by him for the purposes of his cold storage, which had the capacity of 5000 Maunds of potatoes. As a result of acquisition of 637 square yards, the claimant suffered great loss. Processing of potatoes and other necessary ancillary steps before and after storing the same in the cold storage were greatly affected. The claimant alleged that as a result of acquisition of 637 square yards ofland, the capacity of storing potatoes in the cold storage had been reduced to 50 per cent. The claimant alleged in the claim filed in response to the notice under Section 9 of the Land Acquisition Act that his loss could be estimated at Rs. 2,60,000/- being the capitalised value of the loss of Rs. 13,000/-annually on account of the reduced capacity of the cold storage. He further claimed 15% statutory compensation under Section 23(2) of the Land Acquisition Act.

4. Before the Special Land Acquisition Officer, an objection was filed on behalf of the Nagar Mahapalika claiming that the compensation on account of loss alleged to have been suffered by the claimant was much too excessive, and further that the claimant was not entitled to 15% solatium or statutory compensation inasmuch as to the claim Sub-sec. (2) of Section 23 did not apply. The claimant produced himself, Section N. Bhargava, agricultural expert, and Gulab Singh. He also filed some documentary evidence.

5. After considering the evidence, the Land Acquisition Officer held that the claimant had since not filed any evidence of income which he was making before acquisition and any proof of loss suffered by him on account of acquisition of 637 square yards of land, the compensation claimed by the claimant could not be given to him. The view of the Land Acquisition Officer was that in the absence of evidence, the income from the cold storage could be fixed at Rs. 2500/- per annum. After multiplying Rs. 2500/- by 21 years, which was the remaining period for which the claimant could enjoy the lease of the land, the Land Acquisition Officer found that the total compensation to which the claimant could be held entitled to was Rs. 26,250/-. This was worked out on the basis that as the loss suffered by the claimant was only 50 per cent due to acquisition, the annual loss of the claimant was liable to be reduced to Rs. 1250/-. It was this figure of Rs. 1250/- which was multiplied by 21. The Land Acquisition Officer awarded the solatium by applying Sub-section (2) of Section 23 of the Land Acquisition Act.

6. Against this judgment of the Land Acquisition Officer, two applications, one by the claimant Lajpat Rai Kapoor, which gave rise to Land Acquisition Case No. 98 of 1961, and another numbered as 96 of 1961 by the Nagar Mahapalika, were filed. By the application under Section 18 filed by the claimant, the award was challenged by Lajpat Rai Kapoor on the ground that the amount awarded was less than to what he was entitled to, whereas by the reference application filed by the Nagar Mahapalika, the claim was that the compensation awarded by the Land Acquisition Officer was against the provisions of the Act and the evidence on record, and, as such, the same was liable to be reduced.

7. Both of these applications were referred to by the Collector to the Tribunal, which decided them together by the judgment dt. June 21, 1974. The reference of the Nagar Mahapalika was rejected, whereas that of the claimant was allowed in part and a total compensation of Rs. 1,41,750/- minus the amount that had been awarded to him by the Land Acquisition Officer, was given. The claimant was further held entitled to 15 per cent compensation for compulsory acquisition, and on this account he was found entitled to Rs. 21,265.50 Paise, Over and above this, interest @ 6% per annum was also given.

8. Aggrieved, as stated above, these two appeals have been filed, one by the Nagar Mahapalika, and the other by the claimant.

9. From the judgment of the Tribunal, it appears that one of the points raised on behalf of the claimant to the maintainability of the application of reference filed by the Nagar Mahapalika was that of limitation. The claimant had alleged that since the application was not filed within the period prescribed by the Deputy Commissioner, the same was liable to be rejected. This plea was accepted by the Tribunal on the basis of a Full Bench decision of this Court reported in State of U. P. v. Abdul Karim : AIR1963All556 . It is not necessary in this appeal to consider that question inasmuch as the present two appeals have been preferred against the judgment of the Nagar Mahapalika Tribunal given in the reference of the claimant Lajpat Rai Kapoor, which has been numbered as 98. However, it may be pointed out that the aforesaid decision of the Full Bench of this Court has been reversed by the Supreme Court in Mohammad Hasnuddin v. State of Maharashtra : [1979]2SCR265 .

10. Lajpat Rai Kapoor claims to be entitled to compensation for loss of profits of hisbusiness in consequence of the acquisition of 637 square yards of land. His claim for compensation can succeed if it is brought under clause (fourthly) of Section 23(1) of the Land Acquisition Act or Clause (thirdly) of the said section. These two clauses are being quoted below along with the relevant portion of Sub-section (1) of Section 23 of the Land Acquisition Act:

'Section 23(1). In determining the amount of compensation to be awarded for land acquired under this Act, the Court shall take into consideration -

thirdly,-- the damage (if any) sustained by the person interested at the time of the Collector's taking possession of the land, by reason of severing such land from his other land;

fourthly.-- the damage (if any) sustained by the person interested, at the time of the Collector's taking possession of the land by reason of the acquisition injuriously affecting his other property, moveable or immovable, in any other manner, or his earnings.'

11. Before the Tribunal, argument was made about the entitlement of the claimant to get compensation under Clause (fourthly) of Section 23(1) on behalf of the Nagar Mahapalika on the basis that since in the claim preferred in response to the notice under Section 9, the claimant had confined his case to Clause (thirdly) alone, and no case under Clause (fourthly) had been taken, he could not get the claim determined on that basis. The Tribunal overruled the objection of the Nagar Mahapalika. Before us, in this appeal, learned counsel for the claimant has confined his claim under Clause (fourthly). Clause (thirdly) of Section 23(1) lays down that compensation shall include not only the value of the land to be taken, but also damage, if any, to be sustained by the owner of the lands by reason of severing of the land taken from other lands of such owner, or otherwise injuriously affecting such other lands by the exercise of powers of acquisition. Clause (fourthly) deals with the damage sustained by the person interested at the time of the Collector's taking possession of the land by reason of the acquisition injuriously affecting his other property in any manner or his earnings. The distinction between Clause (thirdly) and (fourthly) has been brought out in Indo Burma Petroleum Company v. Collector of Yenangyaung, (1911) 12 Ind Cas 202. It says : --

'Where the damage caused to the other property or earnings of the person interested was caused by the severance of the land acquired, from his other land, and not in any other manner, he is entitled to damages under Section 23(1)(iii) and not Section 23(1)(iv).'

12. There may be a case which may attract both the provisions, Clause (thirdly) and Clause (fourthly). In such a case, the owner may be entitled to compensation under both. In the instant case, however, there was neither any evidence nor proof about the damage caused due to severance. Hence, Clause (thirdly) was rightly given up by the learned counsel for the claimant. He confined the claim to injurious affection and submitted that the claimant was entitled to damages for loss of earnings.

13. In determining the amount of compensation to be awarded for the property acquired under the Land Acquisition Act, the Court under this clause is required to take into consideration the damage, if any, sustained by the person interested at the time of Collector's taking possession of the land by reason of acquisition injuriously affecting his earnings. Clause (forthly) contemplates a case in which on account of acquisition of certain land the value of other properties of the owner has deteriorated or the owner has suffered loss of his own income. The expression 'loss of earnings' has been considered by the Bombay High Court in L. A. Officer v. Jamna Bai, AIR 1946 Bom 142, as not to include prospective earnings.

14. Loss of business means that a person pursuing some trade or business is compelled to give it up or reduce or to carry it on elsewhere, which would give him less profit than what he was making at the former place. In that case he would be entitled to compensation on that account. To give the market value of the land and, in addition, compensation for loss which, the claimant says, has happened to him from being prevented from taking the corpus of the land would really be giving the value of the land twice over. [See Madhab Govinda Roy v. Secretary of State : AIR1929Cal826 . Thus, the owner can claim damages for loss of earnings if he carries on some business in the acquired premises and by virtue of acquisition he is deprived of that profit. But, to give the market value of the land and in addition compensation for loss of business would be giving the value of the land twice over [See Governor General in Council v. Indar Moni Jatia, 5 DLR (Simla) 180 : (AIR 1950 East Punj 296)).

15. In the instant case, the facts were that the claimant was carrying on the business of cold storage and was using 637 square yards of land situated in the neighbourhood for the purposes of stacking and sorting potatoes. The entire land had been taken by him on lease in the year 1949, which measured 2478 square yards. Lajpat Rai Kapoor, P.W. 4, stated in his deposition that he had constructed an ice factory and later a cold storage on the land. The machinery of the cold storage, he stated, was purchased for a sum of between Rs. 25,000/- and Rs. 30,000/-. He further stated that about 1300 or 1400 square yards of open land was necessary for 5000 Maunds capacity cold storage, which capacity his cold storage had. The land was needed, according to him, for collecting, spreading, processing and sorting of potatoes. He stated that the entire area 1350 square yards was being used by him for these purposes. After acquisition, the land left to him was 713 square yards. This area of land was insufficient for enabling him to carry on the business of storing 5000 maunds of potatoes. As a result of acquisition, he claimed that his business was reduced to half.

16. For proving that 1350 square yards of land would be required for collecting, spreading, processing, sorting the potatoes and parking bullock carts etc., Pritam Singh, P.W. 1, produced by him, supported the claimant. He was an Engineer and had passed the course of refrigeration from the Institute of Engineering & Chemical Technology, Bombay. He stated that the whole land was necessary for running the cold storage. In the cross-examination, he stated that after the acquisition of the disputed land, sufficient open land would not be left for the purposes of spreading any drying the potatoes. Support was also claimed from the statement of A. H. Khan (D.W.1) by the claimant. He was Horticulture Officer in the Department of Agriculture, Agra. He stated that he was looking after the potato storage since the time he joined the service in 1943. According to him, some land was necessary for the purposes of cold storage. He stated that the land left with the claimant Lajpat Rai Kapoor was sufficient for utilising the full capacity of the cold storage.

17. After considering the statements of the witnesses produced form the side of the claimant and the Nagar Mahapalika, the Tribunal held that the land acquired was being used by the claimant for the purposes of his cold storage and for spreading, processing, weighing and sorting potatoes. We have gone through the statements of the witnesses and have considered the argument of the Nagar Mahapalika that the remaining land with the claimant was sufficient for utilising the full capacity of the cold storage. On the evidence produced, we are of opinion that the business of the claimant could suffer due to acquisition of 637 square yards of land. The claimant could not carry on it on the same scale on which he was doing before the acquisition. On account of acquisition, the business of cold storage suffered adversely as it was not possible for the claimant to run it to its full capacity.

18. The next question that arises is as to what has been the effect on the earnings of the claimant as a result of the capacity of the cold storage being reduced. For this purpose, the claimant was required to bring evidence to establish that his earnings had been affected due to acquisition. Although, the claimant admitted in his statement that he had been submitting income-tax returns and maintaining accounts, but he did not file anything on record to prove the same. He did not bring any evidence to show as to whether he derived any income or suffered any loss from the cold storage. He stated that he had shown the profits earned by him in the income-tax returns in the year 1953. His statement showed that he had in his possession cash book, Rokar and Khatas. He did not produce these papers. On account of non-production of the relevant records, the Tribunal concluded :

'Therefore, the natural inference is that the said documents, if filed, would have gone against the claimant and would have instead shown that actually there was no earning to the claimant from his cold storage in the year 1953. The fact, however, remains that the claimant had stored about 4343 maunds of potatoes in his cold storage in 1953.'

19. On the question of drawing adverse result, in the circumstances aforesaid, the view of the Supreme Court taken in Gopal Krishnaji v. Mohd. Haji Latif : [1968]3SCR862 , is :

''Even if the burden of proof does not lie on a party, the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof.'

20. The papers withheld by the claimant, in our opinion, would have thrown considerable light on the controversy involved in the case. On the evidence, the Tribunal found that the average storage in the relevant years was about 3000 Maunds. We find ourselves in agreement with the said view. The quantity of potatoes stored in the relevant years was as follows :

Year

Quantityof potatoes stored

Averagerate

1953

4344 maundsapproximately

Noevidence.

1954

2700 maunds

1955

3145maunds '

1956

2316 maunds

AboutRs. 5/- permaund.

1957

Noreliable evidence

1958

2712.25 niaundsapproximately

This would show that the average quantity of potatoes stored in all these years came to about 60 per cent.

21. Taking the average, of 3000 maunds storage as the basis, the next thing to be found is the gross income. In that connection, theclaimant had not filed any evidence. The burden of proving the earnings was on the claimant. There is no evidence on record to show that the income of the claimant had been affected on account of acquisition of the land. Why was the, evidence not produced by the claimant was the question which could not be replied to by the counsel appearing for him before us. The claimant should have by evidence established that by reason of the acquisition, his business of the cold storage had been injuriously affected, and that there had been diminution of the profits. However, considering that the loss suffered by the claimant should not go uncompensated, we have made an endeavour to mete out justice on broad and common sense. The Tribunal held that the average rent in the relevant years was Rs. 5/- per maund. On that basis, the Tribunal estimated the income from the cold storage to be Rs. 15000/-. This figure of Rs. 5/- per maund had been arrived at by the Tribunal on the basis of the rates of the various years, which are mentioned below :

Year

Lowest rate

Highest rate

1954

Re 1/- per maund

Rs. 7/- per maund.

1955

Re. 1/-

Rs. 6/-

1956

Rs. 3/2/- '

Rs. 4/8/- '

1958

Rs. 5/-

Rs. 6/-

22. It was strenuously contended on behalf of the Nagar Mahapalika that since definite and positive evidence was available with the claimant, the Tribunal was not entitled to work out the income on the basis of approximate average rate. There is substance in this submission of the Nagar Mahapalika. However, as we do not think it to be in the interest of justice to interfere with this finding of the Tribunal, we would not be prepared to uphold the contention of the Nagar Mahapalika on this ground.

23. Taking the average of 3000 maunds storage as the basis and multiplying it by Rs. 5/- per maund, the annual income comes to Rs. 15,000/- per year. Out of this gross income, expenses are liable to be deducted. The Tribunal allowed the expenses at the rate of 10 per cent of the total annual income. After deducting Rs. 1500/- from Rs. 15,000/-, the Tribunal held that Rs. 13,500/- would be the net income of the claimant. Since in the opinion of the Tribunal the capacity of the cold storage had been reduced to half as a result of acquisition of 637 square yards of land, the loss was found to be Rs. 6750/- per year. If this figure was multiplied by 21, the total loss was estimated to be Rs. 1,41,750/-.

24. We find it difficult to accept the aforesaid finding of the Tribunal. Apart from the fact that the claimant had withheld important evidence which would have had a bearing on the controversy in question, we find that deduction of 10 per cent as expenses was wholly unjustified. For running a cold storage, power is considered as raw material. 10 per cent of the total income would not cover Up the expenses needed to pay the electricity bills. The expenses, in our opinion, could not be less than 50 per cent. 10 per cent deducted by the Tribunal did not take care of the income-tax also. To us, it appears that 50 per cent should be deducted towards expenses and income-tax out of the total income. Thus, the net earning of the claimant remains at Rs. 7500/- per year. The capacity of the cold storage had been reduced to half as a result of acquisition of 637 square yards of the open space needed for the cold storage. Hence, the claimant would be deemed to have suffered about half of the net earnings in consequence thereof. His loss of earnings as a result of the acquisition would, therefore, come to Rs. 3750/-. The Tribunal had, in our opinion, wrongly, in order to find out the capitalised value, multiplied it by 21. The mutliple to be applied in the present case should have been 20, inasmuch as that is the figure at which the net income is multiplied for the purpose of finding out the capitalised value. The claimant also had made a claim of 20 years loss of profits in the objection filed under Section 9 of the Land Acquisition Act. The Tribunal committed an error in multiplying the annual profit by 21. It should have been 20. Multiplying Rs. 3750/- by 20, the capitalised value would be Rs. 75,000/-. Out of this sum of Rs. 75,000, the amount paid under the award would be liable to be deducted.

25. The next question is about payment of solatium. From a reading of Sub-section (2) of Section 23, it would be found that solatium is payable only on the market value which is determined under Clause (fourthly) (first?) of Sub-section (1) of Section 23. Sub-section (2) of Section 23 does not apply to cases covered by other than Clause (fourthly) (first?). In the present case, the claim had been made under Clause (fourthly). Hence, statutory allowance was not payable. The Tribunal committed an error in applying Sub-section (2) of Section 23 to the present case. After considering a number of decided cases, the Patna High Court held in State of Bihar v. Rameshwar Singh : AIR1973Pat123 , that :

'It is manifest from the observations made and rule laid down in these decisions, which are consistent with the language of Sub-section (2) of Section 23, that statutory compensation cannot be allowed on damage to be paid to the person whose land is acquired under Clause thirdly and fourthly of Section 23(1).'

26. In this view of the matter, the judgment of the Tribunal awarding 15 per cent solatium is liable to be set aside. Due to this reason, we are not called upon to decide the argument of the learned counsel for the claimant about the applicability of the latest amendment made by Land Acquisition (Amendment) Act 1984, raising the rate of solatium from 15 per cent to 30 per cent.

27. So far as interest is concerned, in the instant case, the claimant had withdrawn the amount before coming into force of the aforesaid Amending Act. Accordingly, the provision raising the rate of interest would also not apply.

28. In the result, First Appeal No. 228 of 1974, filed by the Nagar Mahapalika, Agra, succeeds in part and is partly allowed, and First Appeal No. 391 of 1974, preferred by Lajpat Rai Kapoor is dismissed. The judgment and decree of the Nagar Mahapalika Tribunal, Agra, dt, June 21, 1974, is modified to this extent that the amount to which Lajpat Rai Kapoor is found to be entitled to is determined at Rs. 75,000/- minus the amount already received by him under the award given by the Land Acquisition Officer. Lajpat Rai Kapoor would also not be entitled to get 15 per cent solatium. He would, however, be entitled to get interest @ 6% per annum on the amount awarded by us. In the circumstances, we direct the parties to bear their own costs.